The funding was announced Monday during a news conference in the station's Great Hall.
The project will add new restrooms and double the passenger waiting area.
Officials say the current waiting area is too small to accommodate all of the travelers, who end up sitting on the floor.
Transit leaders are also preparing for the influx of passengers expected once high-speed rail comes to Chicago.
Air conditioning and a new heating system will also be added to the vast Great Hall.
On an average weekday, close to 140,000 passengers pass through Union Station.
An average of 55 Amtrak trains go in and out of Union Station every day. The station also serves 11 Metra lines.